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Will Solar be an answer to India’s Electricity Generation Target?

Pathways to Development

September 09, 2017

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Considering the current trends of decarbonizing the energy production mix as decided in the 2015 Paris Climate Change Summit by both the developed and developing nations, this opening article starts the series of analyzing three main alternatives proposed against fossil fuels for generating large amounts of electricity in India: solar, wind, and nuclear power.

Electricity access in India

Any discussion about electricity production in India must take into account grassroots realities. As per the World Bank’s Sustainable Energy for All ( SE4ALL ) database, only 79 per cent of India’s population has access to electricity. Since electricity access is mostly measured by looking at household’s connectivity to grid, the world bank data fails to capture nuanced view of energy access in India where more than 240 million are deprived of access to electricity. According to a 2016 CEEW survey (conducted in six of the most energy-deprived states of India), while 90 per cent of villages were electrified this translated in practical terms to only about 63 per cent of the households having a connection to the grid. Even worse, only 37 per cent of households have any appreciable level of electricity. This is all to say that, India has a long way to go before even basic provision of electricity or energy to all citizens is a foregone conclusion. It also raises the question of understanding the quality of electricity access in terms of its availability, reliability, quality and affordability.

Electricity is not the entirety of the country’s energy needs—neither transportation nor cooking is based on electricity in most parts of India. Shifting the majority of the country to safe cooking energy (LPG as opposed to polluting, physically dangerous chulhas) in itself is a necessary project in order to meet household’s basic energy requirements. It must also be mentioned that electricity is a basic human need and in no way a luxury.

India’s Energy Needs

Projections of energy demand are always difficult, but even with extensive increase in renewables capacity (like solar, wind, and hydropower), it is doubtful that India’s energy demand can be met without using an unhealthy amount of fossil fuels. World Energy Outlook, in a Special Report published in 2015, projects that India, in order to meet its energy generation goals amidst its commitment to SDGs and the Paris agreement on climate change, needs to build more than 880 gigawatts (GW) of new power generation capacity over the period to 2040.

So the question arises: can solar energy fulfil India’s goal of this targeted generation capacity?

India’s Solar Power

As of December 2016, India’s solar capacity was 9 GW. India added 1,869 Megawatt (MW) in the second quarter of 2017, bringing installations in the first half of the year to 4,765 MW. This figure surpasses the 4,313 MW installed in all of 2016. Large-scale solar installations made up 4,290 MW (90 per cent) and rooftop installations constituted the rest.

This increase is chiefly spurred by the reducing cost per unit of solar, but much of this is due to China’s manufacturing of solar equipment like panels. USA’s largest solar panel producer has filed for bankruptcy and blamed China’s manufacturing. The development of domestic production capacity in India has already been hurt by WTO ruling against India’s domestic production demands, China may ring the death-knell against Indian domestic manufacturers. This is a hazard to India’s energy security.

Total renewables capacity in India is now past 57 GW, but principally due to large hydro projects with dams that activists are skeptical about.

The total installed power sector capacity of the country is 330 GW.

The country closest in population to India is China (2nd and 1st most populous countries in the world) which has a total installed solar capacity of over 43 GW according to PowerWeb data. It has the highest solar power capacity in the world, with nearly 70 per cent of world installed capacity.

China also has over 1500 GW of installed capacity. This is about three times India’s current capacity.

India is projected to have a demographic boom while Chinese population is expected to stabilize in the near fut

Thus, by these estimates, it can be suggested that India will need to produce at least five times the present installed capacity of energy in order to provide its population with a decent quality of life.

India’s policy

India’s recent Intended Nationally Determined Contribution (INDC) to climate change mitigation at the climate change conference in Paris, 2015 included concrete values on renewable energy addition. The INDC is not legally binding and India has already placed a caveat emptor by pointing out that the costs of mitigation are enormous and pointing out that both technology transfer and monetary support to developing countries is required. Nevertheless, a moral responsibility exists, considering the vital necessity of drastically reducing carbon emissions.

India acknowledges its difficult position by positing cuts in its INDC as reductions in emissions intensity (increase in energy efficiency) rather than absolute emissions. In simple, India proposed that the country’s carbon emissions per unit of energy will reduce (by approximate a third) but absolute emissions will increase due to higher increases in consumption of energy as compared to increase in energy efficiency – a form of Jevons paradox in action.

Recent highlights of solar power in India:

In an initiative of the Ministry of Environment, Forest and Climate Change, the Green Generation for Clean & Energy Secure India, there has been more than five times increase in renewable capacity from 35 GW (upto March 2015) to 175 GW by 2022.

National Solar Mission scaled up five-fold from 20 GW to 100 GW by 2022. Kochi Airport is world’s first airport to fully run on solar power.

Solar powered toll plazas envisaged for all toll collection booths across the country.

From 2008 to 2016 India produced about 9 GW of solar power capacity, out of which about 4 GW was added in 2016. Given government’s support to speeding- up the process of executing tenders of various solar power plants coupled with falling costs of solar energy production, if the current year’s trend (2017) continues, India can expect solar energy installation to go up to 9.4 GW per year, which is a remarkable increase.

With simple linear mathematics, addition of about 9 GW per year post 2017 brings the country’s solar capacity to 63 GW by the end of 2022, slightly more than 60 GW planned by the government to achieve by investing in solar parks and other ultra-mega solar power projects until 2022. Adding 40 GW more (mostly through rooftop solar panels) to reach the INDC pledge of 100 GW would involve 18 GW of addition of solar capacity per year or nearly double the addition expected in the current year.

So what’s the problem?

There are a number of issues with solar power. Firstly, the main problem however, is the ‘installed capacity.’ Every form of power generation has something called Capacity Utilisation Factor (CUF). This is the amount of the installed capacity that is actually available for use. The CUF is never 100 per cent. That is, 1 GW of installed capacity will never produce 1 GW of power. Normal transmission and distribution losses exist, but solar is vulnerable to the natural factors which specifically impact its concentrated solar power (CSP) installations. Stormy days, air pollution and other natural problems reduce CSP’s production capacity.

A 2014 performance analysis study by the Malpani group, a pioneer in the industry of power generation, calculated that for every megawatt of solar power capacity installed, an average output of a mere 19% is extracted. Out of every 1 GW, or 1000 MW installed, only 190 MW is the actual energy produced. As per this analysis, even if India manages to install 100 GW of solar capacity, it will only receive 19 GW of power from that installation. In comparison, coal in India has a CUF of 60% even when its quality is quite low.

Secondly, the pipeline of Indian utility-scale projects under construction is currently 12.2 GW, with about 6 GW pending to be auctioned. 2017 saw the lowest ever tariff of Rs 2.44 ($0.037)/kWh in the recently conducted 500-MW Bhadla Phase-III Solar Park auction. Most utilities now want a similarly low tariff, which has led to delays in power purchase agreements. Mega-farms and solar parks have also run into problems due to land acquisition issues.

Thirdly, by November 2016, in the year only 0.5 MW of solar rooftop capacity was installed, while 3 GW was sanctioned and under installation, according to MNRE. The government’s idea to produce 40% of solar power from solar rooftop projects looks unlikely. Partly the reason is expense. Households don’t find the subsidies sufficient to make up for the expense of solar rooftop panels.

Way forward

Given the situation, there are a few immediate steps needed in order to address the burgeoning energy needs of India. While India can hope for technology transfer, it must make an immediate commitment to invest in scientists working to improve the available technology in solar power, both to improve energy security by developing domestic technological capability and to ensure that India is investing in long-term solutions to the energy problem. There must also be a realistic assessment of the costs of solar power, so that unrealistic low bids don’t lead to failures, further on which require government bailouts.

I will continue the discussion on India’s options in the energy scenario in further articles, speaking about wind power and nuclear energy.

(This article has been written by Mohini Ganguly who is working as a Research Associate in CUTS International, under Centre for International Trade, Economics & Environment. She holds a Masters in Climate Change and Sustainability Studies from Tata Institute of Social Sciences (TISS), Mumbai)